Reply to: Brexit/IR35 and Working Abroad

[m0n1k3r]

I'm currently working from home in the UK (ltd company), through a Dutch agency to a Danish consultancy for a Danish end client. Naturally I am outside IR35.
Why would any of the entities I work through/to give a toss about IR35 and UK legislation should HMRC investigate and decide I'm inside IR35?

They won't. They only care about their responsibilities towards their own tax authorities. The HMRC is your own concern. If the HMRC would ask your EU clients for information, there's a likelihood they won't even bother to answer the HMRC. Strictly speaking, it's in their own interest to not answer anything (if they at all answer) that would give the HMRC the impression that you have any sort of decision making or representative authority on behalf of your foreign client as it would give them a fixed establishment in the UK and therefore become subject to the HMRC themselves (as has happened).

[dsc]

I wonder quite how HMRC would enforce the UK presence to be liable in this case anyway.
I imagine HMRC would just leave it alone as too complex to go after one individual, or come after you directly.
As long as you're not blatantly doing an inside role and just hoping the liability lies elsewhere you'll be fine I'm sure.

Well that is exactly what I was thinking, they would have to basically say that the client should've engaged via their UK office even though the work done has feck all to do with that office and / or the UK as a country, so why the hell would the client go down this route in the first place? Besides, it would be effectively telling the client how to run their business which I'm sure they would just laugh at. This whole "UK presence" seems rather retarded and imho represents scenarios where HMRC is well out of their jurisdiction.

[jamesbrown]

I wonder quite how HMRC would enforce the UK presence to be liable in this case anyway.
I imagine HMRC would just leave it alone as too complex to go after one individual, or come after you directly.
As long as you're not blatantly doing an inside role and just hoping the liability lies elsewhere you'll be fine I'm sure.

Indeed. They will be looking for low hanging fruit within UK companies that have a lot of UK contractors. Overseas supply chains are complex and most definitely not low-hanging fruit, so just cover your **** and forget about it.

[Lance]

Actually this sounds about right, the client has a London office, but I very much doubt they have any idea what goes on in the Danish office as I wouldn't be surprised those are separate entities. So I can imagine no one in the UK knows I'm doing work for the Danish office but I'm actually based in the UK and the Danish office has no clue about IR35, so wouldn't be asking any related questions anyway. Originally the agency expressed concerns that I'm in the UK, but that was more to do with Brexit, which later on they accepted and never mentioned again. Perhaps if the agency was in the UK they would be raising questions, but as they are in Denmark as well, I'm 95% sure they have no idea what IR35 is.

I wonder quite how HMRC would enforce the UK presence to be liable in this case anyway.
I imagine HMRC would just leave it alone as too complex to go after one individual, or come after you directly.
As long as you're not blatantly doing an inside role and just hoping the liability lies elsewhere you'll be fine I'm sure.

[dsc]

The best, and most probable, scenario is that the liability and responsibility lies elsewhere and the supply chain has fubared. Many supply chains will.

Actually this sounds about right, the client has a London office, but I very much doubt they have any idea what goes on in the Danish office as I wouldn't be surprised those are separate entities. So I can imagine no one in the UK knows I'm doing work for the Danish office but I'm actually based in the UK and the Danish office has no clue about IR35, so wouldn't be asking any related questions anyway. Originally the agency expressed concerns that I'm in the UK, but that was more to do with Brexit, which later on they accepted and never mentioned again. Perhaps if the agency was in the UK they would be raising questions, but as they are in Denmark as well, I'm 95% sure they have no idea what IR35 is.

[jamesbrown]

So in the case of clients with UK presence, be it an office for example, am I required by law to get a status determination? Or can I simply play dumb and let them sort it out if HMRC comes knocking? Already with Qdos and have their IR35 insurance, so I'm prep'd-ish, haven't reviewed the current contract but read through it and it has loads of IR35 proof clauses. Work is very much outside, absolutely no control, direction etc.,

Currently doing work for a Swedish company with an office in Denmark (which is where the team is) via a Danish agency. Both the agency and client have offices in the UK, so theoretically the client is liable and should provide status determination, but what if they don't?

It's on them. You could ask for it and keep a record of your asking. Otherwise, complete the assessment yourself and assume that the responsibility/liability is with you. In those circumstances, there can be no suggestion of fraud on your part and, worst case scenario, you've done your own due diligence when the responsibility/liability was yours. The best, and most probable, scenario is that the liability and responsibility lies elsewhere and the supply chain has fubared. Many supply chains will.

[dsc]

So in the case of clients with UK presence, be it an office for example, am I required by law to get a status determination? Or can I simply play dumb and let them sort it out if HMRC comes knocking? Already with Qdos and have their IR35 insurance, so I'm prep'd-ish, haven't reviewed the current contract but read through it and it has loads of IR35 proof clauses. Work is very much outside, absolutely no control, direction etc.,

Currently doing work for a Swedish company with an office in Denmark (which is where the team is) via a Danish agency. Both the agency and client have offices in the UK, so theoretically the client is liable and should provide status determination, but what if they don't?

[Lance]

Brexit/IR35 and Working Abroad

It isn't for you to determine whether someone in the supply chain has a UK connection; how could you possibly know, other than by searching public information and guessing? A PE is not an easy thing to determine. I think you (and some other posters) are confused because you're starting from the wrong position. You need to ask the supply chain (at most) and, if the information is not forthcoming, assume the responsibility and liability is on you (i.e., belt and braces). Remember, you are neither responsible nor liable if there is a company with a UK connection and they have failed in their legislated responsibilities under the ITEPA so, absolute worst case scenario, it is BAU (even in extremis, absent fraud).

There seems to be many failing to grasp this.
The whole landscape has got a lot simpler. And for many this is better (other than the tax dodging part).

[jamesbrown]

I am completely lost on the "UK connection" part, I am in contract with a Belgian client (no agency) working fully remote. The client does not have any legal entity in the UK (at least not in ownership as the legal entity would be different if it existed). The parent company of the client though does have a UK legal entity. I am going to ask IPSE for clarification, if they say there is a connection I have to explain to my client that they have to tell their parent company to contact their UK company to do the assessment.

It isn't for you to determine whether someone in the supply chain has a UK connection; how could you possibly know, other than by searching public information and guessing? A PE is not an easy thing to determine. I think you (and some other posters) are confused because you're starting from the wrong position. You need to ask the supply chain (at most) and, if the information is not forthcoming, assume the responsibility and liability is on you (i.e., belt and braces). Remember, you are neither responsible nor liable if there is a company with a UK connection and they have failed in their legislated responsibilities under the ITEPA so, absolute worst case scenario, it is BAU (even in extremis, absent fraud).

[MPwannadecentincome]

It is what it is? That's helpful. UK connection clear? Not really.

Nothing clear about this at all IMHO. Yes, realise that it will all fall on my Ltd, so will ensure that the contract I have with them is as IR35-proof as I can get it, though I suspect they will be reluctant to change clauses that need tweaking.

I am completely lost on the "UK connection" part, I am in contract with a Belgian client (no agency) working fully remote. The client does not have any legal entity in the UK (at least not in ownership as the legal entity would be different if it existed). The parent company of the client though does have a UK legal entity. I am going to ask IPSE for clarification, if they say there is a connection I have to explain to my client that they have to tell their parent company to contact their UK company to do the assessment.

[MPwannadecentincome]

3. VAT & tariffs. I've no idea on tariffs, but I think you would need to register for VAT in Belgium and pay the VAT directly to the BE govt. As opposed to pre-Brexit where you simply zero-rate your invoices for export. Yes, you need accountancy advice on this one.

I am in contract with a Belgian client working remote from UK via PSC. I paid for professional advice in Belgium in order understand that my economic base was in the UK and not Belgium. With regards to VAT their advice was the same as my UK accountant, the invoice is zero rated but have to write "REVERSE CHARGE" on their and to quote the client's VAT number, this means the client deals with VAT locally in Belgium.

[jamesbrown]

2. You are outside IR35. An employer has to have a presence in UK to employ you. That's not the case - you are exporting your services. Therefore you cannot have an employer-employee type relationship with the entity you are providing services too.

Completely false. It is perfectly possible to have a contract with an overseas entity and for that contract to be inside IR35. Incidentally, it is also perfectly possible to have a contract of employment with an overseas entity, but the intermediaries legislation is only concerned with employment for tax purposes (deemed employment). In terms of deemed employment, you are confusing two entirely separate things, namely who is responsible for a determination and what that determination is. The only thing that happens with a fully overseas supply chain is that the UK PSC remains responsible and liable. But apart from all that...

[jamesbrown]

It is what it is? That's helpful. UK connection clear? Not really.

Nothing clear about this at all IMHO. Yes, realise that it will all fall on my Ltd, so will ensure that the contract I have with them is as IR35-proof as I can get it, though I suspect they will be reluctant to change clauses that need tweaking.

You're over-complicating this. There is absolutely nothing you can do to make the supply chain understand and adhere to the legislation beyond the wafer thin avenues in the legislation itself (e.g., client-led status disagreement process, which is completely irrelevant here). Either YourCo is responsible and liable or it isn't and the supply chain won't tell you. So quit over-complicating things and act like it's responsible and liable.

[jezosaurus]

Hi,

1- I will have to fill the LIMOSA because not resident in belgium that will provide me a tax, social security and VAT number. But I believe I don't need to pay any taxes as I will be paying them in UK
2- Is it correct to say that depending on my contract being In or Out IR35 should guide me choosing between creating a UK LTD co or a (preferably FCSA member) umbrella company? (If Out then LTD, if In Umbrella)

1. You are working in the UK through a UK LTD, therefore paying tax and NI in UK. No Limosa, no residency in BE, no taxes in BE. Limosa only applies if you are in Belgium.
2. You are outside IR35. An employer has to have a presence in UK to employ you. That's not the case - you are exporting your services. Therefore you cannot have an employer-employee type relationship with the entity you are providing services too.
3. VAT & tariffs. I've no idea on tariffs, but I think you would need to register for VAT in Belgium and pay the VAT directly to the BE govt. As opposed to pre-Brexit where you simply zero-rate your invoices for export. Yes, you need accountancy advice on this one.
4. You can still pop over for the odd business meeting.

BTW - I live in Belgium. I ran away from IR35 17 years ago and have been happily contracting through my Belgian LTD ever since.

[jezosaurus]

Ireland are one of the few countries that don't seem to have this "EU Passport holders only" ban on UK contractors at the moment.

CTA - Common Travel Area - Brits have the right to live and work in Ireland and vice versa since 1923.